The IMF has predicted that global markets will see recessionary forces decline over the course of this year but has warned that future growth will be weak.
The UK economy is forecast to contract by 4.2 per cent this year, but will see growth of 0.2 per cent in 2010.
Although economic growth is now expected to be about half a percentage point better than previously expected, recovery is still expected to be slow, as key markets such as property have not yet bottomed out.
In Europe, the IMF predicts that growth will be slower than elsewhere. Although consumer activity and business surveys show recovery, there are few real signs of stability.
The report notes that the European sector has yet to make the kind of employment cuts seen elsewhere: “Macroeconomic policies are providing support but much of the adjustment in the labour market still lies ahead. Rising unemployment will weigh on consumption and activity, as will the economy’s heavy dependence on a still-ailing banking sector.”